Attribution rules re gifts, transfers, or
loans to a spouse or a related minor child

Income Tax Act s 74.1(1), s 74.1(2), s
74.2(1), 74.5(2)

If income-producing property, or money which is used to
purchase income-producing property, is transferred or loaned to a related minor,
either directly or indirectly, or by means of a trust, the income from the property
will normally be attributed back to the person giving the gift or loan.
The capital gains from the property will be considered capital gains of the
minor.

A related minor is a child who is under 18
years old and does not deal with the individual at arm's length, or is a niece
or nephew of the individual.

If income-producing property, or money which is used to
purchase income-producing property, is transferred or loaned to a spouse,
either directly or indirectly, or by means of a trust, the income and capital
gains from the property will normally be attributed back to the person giving
the gift or loan.

In transfers to a related minor or to a spouse, any income
earned from the original income (secondary income) will be considered income of the
minor or spouse.
An example would be where dividend-producing shares are transferred to a minor
or spouse, and dividends are used to purchase more shares. The dividends
from the additional shares would be income of the minor or spouse.

The attribution rules apply only to property income, not to
business income earned from money or business assets transferred.

The attribution rules do not apply to loans where interest
is charged at a rate at least equivalent to the specified rate of
interest. See our income splitting article on lending
to a lower-income spouse or child.